THE COST OF flats and hence of rentals in the city are reaching dizzy heights. Excluding the cost of land, construction cost has zoomed from around Rs 100/sq.ft in the 1980s to Rs 300 in the 1990s, to over Rs 1000 around 2005 and over Rs 2000 today. Of course, land prices in this period have also skyrocketed some 2000 times in a typical part of the metro.
Rising costs of housing
The NDA government took efforts to offer housing loans at low rates of interest. Thus, in the early 2000s, housing loans were offered at around 7.5 per cent. A low income flat of 400 sq.ft flat was priced around Rs 4 lakh. The mortgage on this, over a 20 year period, was around Rs 3000 p.m. On rental, such a house was available for around Rs 1500 p.m. Today, interest rates and construction costs have increased manifold. Rental rates have increased in tandem. Thus today, someone earning around Rs 10,000 a month has to pay close to Rs 4000 on rental with the high costs of other essentials.
Chief Minister Jayalalithaa linked taxes on cement to pricing during her earlier regime and that had a salutary effect on containing prices. Today, cement manufacturers have increased prices substantially over the past one year. The increase was from around Rs 240 to around Rs 310 a bag. Seven large manufacturers have been charged with cartelisation and the Competition Commission has imposed a fine of around Rs 6500 crore on these. In tandem, the prices of steel, blue metal and even sand have increased substantially. Steel prices, for instance, have been pushed up from around Rs 46/kg to over Rs 56/kg by leading manufacturers.
Sand prices shot up from around Rs 28/cu.ft to Rs 65/cu.ft during December.
The government would do well to go for large condominiums of 25 floor and above. The floor space index for such condominiums can be increased substantially. These can be built over land owned by the government. An imaginative combination of offering a portion of the land for commercial pricing can induce private promoters to offer mass housing at modest prices.
The Santa Cruz model
In Mumbai such a scheme was effectively utilised to convert slum tenements in highly congested places like Santa Cruz into multi-storeyed flats with quality construction and decent facilities. Dwelling units in the size of 260 sq.ft were offered for the slum dwellers with a lift, kitchen, hall and a room.
The Tamil Nadu government can think of such a plan that would service the twin purpose offering decent dwelling units for low income groups. Simultaneously, it will also eliminate the sprawling slums.
The target should be to offer dwelling units in the rental range of Rs 1000-2000 p.m which will ensure decent housing for low income population. With the cooperation of property developers and industry, the government can do this in a specific time bound plan closely on the heels of the low priced canteens. The government would do well to focus on this other essential need of the masses.